Why Would Someone Sell A Structured Settlement – Giveaway Comments45 Comments

These days when someone is awarded a cash settlement in a lawsuit, it is rare to receive a lump sum of cash. Insurance companies, being the main companies making these settlements, would much rather award a structured settlement. This means that instead of receiving the cash all at once, it is instead spread out over many years with monthly payments.

As a result of this structure, the company paying the settlement is better able to pay out those funds and the recipient is forced to be more responsible with that money. A similar structure exists with lottery payments and annuity payments.

Unfortunately there are times when the recipient just really needs some of that money upfront. So in this case they may turn to the various companies that buy future structured settlement payments. For a discounted rate, these companies bid on structured settlement payments. Then, provided that the court agrees with the reason to sell the payments and the price being offered, the seller gets a lump sum payment.

With that layer of protection provided by the courts, it is a lot more difficult for people to just recklessly spend any structured settlements. Since those payments are often meant to replace a person’s income, that is usually in their best interests.

One of the most common reason people choose to sell some structured settlement payments instead of accepting the annuity is because they’ve fallen on tough times and want to pay off some debts. The alternative for them would be getting harassed on the phone by creditors or building up more debt with a personal loan.

Then there are times when someone wants to buy a house. With the current real estate market, the prices may be too tempting to pass up. Even with the structured settlement sale discount, this might end up being a good investment. Plus there is that certain level of satisfaction that comes from owning your own home.

A home isn’t the only investment that some people choose to pursue when selling structured settlements. Sometimes the seller really wants to start a business or pursue another kind of investment. These are the ones that are a little more questionable since there may be too much risk involved. Still, the person should have a right to sell their payments if that is what they want to do.

Hopefully you are never in a situation where you have to go to court and end up with a structured settlement. If you do, at least you have the flexibility to sell some of those structured settlement payments if you choose to do so.

a Rafflecopter giveaway

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By : Jeremy Biberdorf | 9 Jan 2013
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45 thoughts on “Why Would Someone Sell A Structured Settlement – Giveaway

    1. Jeremy

      I think most people wouldn’t even know this option was available unless they happened to be in this situation. One of my employer’s big competitors does do some tv advertising, but it’s probably not during peak hours.

      Reply
  1. AverageJoe

    What a frustrating picture…..I can’t imagine the pain. That said, it kind of reminds me of the movie office space and that guy saying, “Some day you could all be as lucky as me….”

    Reply
    1. Jeremy

      Yep, it’s exactly like that. It is certainly a frustrating situation, but at least the settlement would help those people get by. And if they do happen to end up in a worse situation, at least they have the option to sell payments.

      Reply
  2. Grayson @ Debt Roundup

    Thanks for including me on this giveaway Jeremy. I appreciate it. I have thought about this before with lottery winnings (not that I have won), but wasn’t too sure until I started thinking about investments and growing the money.

    Reply
    1. Jeremy

      Anytime Grayson. It can make a whole lot of sense to invest that money yourself rather than receiving payment gradually over time. That being said, it would need to be a sound investment to be really worthwhile. Real estate might be the best example with the current markets.

      Reply
  3. Jason @ WorkSaveLive

    Thanks Jeremy for putting all of this together! I’m hoping this giveaway will be as successful as the last. It’ll be interesting to see if $1,000 cash garners as much attention as an iPad 3 (despite the $1000 clearly having more value).

    Reply
    1. Jeremy

      Yes it will be interesting to see which is more desirable. This contest does have more than double the number of co-hosts though. So I’d think this one would get more entries overall.

      Reply
  4. Edward Antrobus

    I understand the reasoning behind these giveaways, but when half the blogs on my daily comment list come out with basically the same post, it really makes it tough to come up with comments for all of them!

    Reply
    1. Jeremy

      Yeah I could see that being a problem, and only half of the co-hosts have gotten their post up do to a rushed start to this contest. So be ready to comment on more similar posts :)

      Reply
  5. Jacko

    A bird in the hand is worth more than 2 in a bush.

    People need to realize that the fed just projected that interests rates for your savings accounts will be locked at 0% until 2016.

    Would I wait to get paid?

    uh, NO.

    Reply
    1. Jeremy

      Interesting note about the savings accounts interest lock. Since I’m in Canada I’m not sure if that will somehow indirectly affect me, but I don’t tend to use savings accounts anyway.

      Reply
    1. Jeremy

      Well you better put that luck towards an even bigger contest. I think there will be a whole lot of entries in this contest by the end of the month.

      Reply
  6. Mike Craig

    There may be serious tax consequences in taking the lump sum. Such a large amount is likely to cause the recipient to be in a higher tax bracket. This should be thoroughly discussed with the recipient; however, if the benefits still outweigh these considerations, there may be situations where it’s a good idea.

    Reply
    1. Jeremy

      Yes tax consequences do have to be considered. That is why instead of selling the entire structured settlement, most sellers just liquidate a number of payments to meet their needs.

      Reply
  7. Christopher @ This That and the MBA

    When I was a workers comp adjuster we used to try to push people into these as part of the settlement, because the company I worked for had our own structured annuity division and we got to keep the money inhouse and just pay it out over time. Thanks for hosting!!

    Reply
    1. Jeremy

      It does seem like better a situation for the company or government paying out the settlement. That way they can keep money invested in the meantime. Also, over time those monthly payments become less valuable as inflation takes over.

      Reply
  8. Wendy T

    The vast majority of the entries for following via RSS take me to Feedly. I added each blog to my feedly stream, but the entry asks for my email address. I do not see (in most) how to subscribe via email. I hope I am doing the correct thing.

    Reply
    1. Wendy T

      Rephrasing it as a question, when you ask for RSS subscriptions do you mean the rss feed via feedly, or is it an email subscription that qualifies as an entry?

      Thanks.

      Reply
      1. Jeremy

        Sorry for the late reply. The e-mail is just for validation but it is essentially the honor system for some entry options. Just somehow subscribing to the RSS feeds is sufficient.

        Reply

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